LONDON BAE Systems (BAES.L) warned on Thursday that it faced uncertainty in its core market, the United States, a day after the collapse of talks with EADS EAD.PA on a merger that managers had said would broaden their business.
In a short statement, the British armaments manufacturer said it was trading in line with expectations but that it could face some limited trading disruption in the United States in the final quarter of 2012, as the government in Washington tries to pare the federal deficit.
U.S. sales account for nearly half of BAE's revenue.
"We are obviously disappointed that we were unable to reach an acceptable agreement with our various government stakeholders," BAE Chief Executive Ian King said of the failed deal to merge with European Airbus manufacturer EADS that would have created the world's biggest aerospace and defense group.
"However, our business remains strong and financially robust. We continue to see opportunities across our platforms and services offerings and in the various international markets in which we operate."
Talking to reporters on Wednesday, King had played up the company's opportunities outside the United States and Britain, naming Saudi Arabia and Oman as two areas of growth.
The group said on Thursday it expected modest growth in overall underlying earnings per share for 2012, but this assumed a satisfactory conclusion to pricing negotiations this year with the Saudi government on the Typhoon Salam program to supply the Gulf kingdom with Eurofighter Typhoon jet fighters.
It is also in talks with Oman to supply aircraft and support for them. And it has secured a contract win in South Korea, which it sees as a key market with potential for further deals.
(Reporting by Kate Holton; Editing by Sarah Young and Alastair Macdonald)